VFL expands muni junk exposure to 100% (June 1, 2026)

The Board of Trustees of abrdn National Municipal Income Fund approved a change to the Fund’s non-fundamental investment policy to permit investing up to 100% of its assets in municipal obligations rated below investment grade or unrated but judged comparable.

Rhea-AI Filing Summary

The Board of Trustees of abrdn National Municipal Income Fund approved a change to the Fund’s non-fundamental investment policy to permit investing up to 100% of its assets in municipal obligations rated below investment grade or unrated but judged comparable. The change is effective June 1, 2026.

The filing states the Fund expects an initial allocation of 30% to below-investment grade municipal obligations, rising to approximately 30%–50% over time. The amendment removes the prior 20% cap and warns of greater credit, liquidity, and price volatility risks associated with high-yield municipal securities.

Insights

Municipal Credit Strategist

Fund removes 20% cap, allows up to 100% high‑yield munis; exposure targeted at 30%–50%.

The policy change permits the Fund to allocate materially more to below‑investment grade municipal obligations, which increases credit and liquidity risk. The filing states an initial 30% allocation and an anticipated range of approximately 30%–50% over time, providing a clear directional intent.

Performance will depend on credit selection and market liquidity; adverse high‑yield muni market moves could cause marked NAV volatility. Subsequent portfolio-level disclosures will show actual allocations and realized impact.

Key Figures

Effective date: June 1, 2026 New below‑investment grade limit: 100% of assets Prior below‑investment grade limit: 20% of net assets +2 more

5 metrics

Effective date June 1, 2026 Policy change effective date

New below‑investment grade limit 100% of assets Permitted allocation in amended non-fundamental policy

Prior below‑investment grade limit 20% of net assets Previous non-fundamental policy limit

Anticipated initial allocation 30% of assets Fund's stated anticipated larger allocation to below-investment grade munis

Anticipated longer‑term allocation range approximately 30%–50% of assets Fund's expected allocation over time to below-investment grade munis

Key Terms

below‑investment grade, high‑yield bonds, non‑fundamental investment policy, unrated but judged by the Investment Manager to be of comparable quality

4 terms

below‑investment grade financial

"“The Fund may invest up to 100% of its assets in Municipal Obligations that are rated below investment grade”"

high‑yield bonds financial

"“Investments in high‑yield bonds (commonly referred to as “junk bonds”) and other lower-rated securities will subject the Fund to substantial risk of loss.”"

non‑fundamental investment policy regulatory

"“approved a change in the Fund’s non-fundamental investment policy relating to investments in below-investment grade municipal obligations”"

unrated but judged by the Investment Manager to be of comparable quality financial

"“unrated but judged by the Investment Manager to be of comparable quality.”"

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What change did abrdn National Municipal Income Fund (VFL) make to its investment policy?

The Fund raised the limit on below-investment grade municipal obligations to 100% of assets. The Board approved the change and it becomes effective June 1, 2026, replacing the prior 20% cap.

What allocation to below‑investment grade munis does the filing anticipate for VFL?

The filing anticipates an initial allocation of 30% to below‑investment grade municipal obligations and a longer‑term allocation of approximately 30%–50% as the Fund rebalances.

What risks did the Fund disclose from increasing high‑yield municipal exposure?

The Fund warned of greater credit exposure, price volatility, and reduced liquidity. It notes high‑yield ("junk") bonds are more speculative and may be harder to price or sell in negative market conditions.

When does the policy change take effect for VFL?

The change to permit up to 100% exposure to below‑investment grade municipal obligations becomes effective on June 1, 2026.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Accepted by SEC EDGAR 04/15/2026 - 09:04 PM EDT Learn about SEC filing dates

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):  April 15, 2026

ABRDN NATIONAL MUNICIPAL INCOME FUND

(Exact name of Registrant as specified in its charter)

Massachusetts		811-07410		41-173716
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

1900 Market Street, Suite 200 Philadelphia, PA
(Address of Principal Executive Offices) 19103
(Zip Code)

(800) 522-5465

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest	VFL	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 8.01. Other Events

On April 15, 2026, the Board of Trustees (the “Board”) of abrdn National Municipal Income Fund (the “Fund”) approved a change in the Fund’s non-fundamental investment policy relating to investments in below-investment grade municipal obligations as set forth below. This change will be effective on June 1, 2026.

Current	New
“The Fund may invest up to 20% of its net assets in Municipal Obligations that are rated below investment grade or that are unrated but judged by the Investment Manager to be of comparable quality.”	“The Fund may invest up to 100% of its assets in Municipal Obligations that are rated below investment grade or that are unrated but judged by the Investment Manager to be of comparable quality.”

All other investment limitations remain unchanged.

Exposure to Below Investment Grade Quality Municipal Obligations

Removing this non-fundamental investment limitation may result in larger credit exposure and greater investment risk from below investment grade quality Municipal Obligations. In particular, the Fund’s anticipated larger allocation (initially 30% and between approximately 30% and 50% over time) to below investment grade quality Municipal Obligations increases the risk from investment in high-yield bonds. The risk for investments in high-yield bonds and other lower-rated securities is as follows: Investments in high-yield bonds (commonly referred to as “junk bonds”) and other lower-rated securities will subject the Fund to substantial risk of loss. Investments in high-yield bonds are speculative and issuers of these securities are generally considered to be less financially secure and less able to repay interest and principal than issuers of investment-grade securities. Prices of high-yield bonds tend to be very volatile. These securities are less liquid than investment-grade debt securities and may be difficult to price or sell, particularly in times of negative sentiment toward high-yield securities.

A copy of the press release relating to the changes described above is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	abrdn National Municipal Income Fund
Date: April 15, 2026	/s/ Robert Hepp
	Name: Robert Hepp
	Title: Vice President